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Author Topic: AA-US Update
Post Captain
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Dallas Morning News - 1/28/13

Reuters on Friday gave an update on the merger progress, so we’ll do a Q&A on how we understand where American Airlines and US Airways are on the question of the possible merger.

Q. Wasn’t there supposed to be a merger decision by now?

A. As we wrote late last year, the merger is like a desert mirage: We can see it clearly off in the distance, but it doesn’t seem to be getting any closer.

Q. What happened to the rumors that there’d be a decision around Jan. 11?

A. It slipped to Jan. 30.

Q. What happened to the rumors that there’d be a decision around Jan. 30?

A. It has since slipped to around mid-February.

Q. Why did it slip?

A. We can surmise that it just takes time to settle all the questions. We may also speculate that American Airlines executives were heavily involved in the rebranding rollout that finally happened on Jan. 17, which took up a lot of their time.

Q. What’s up next?

A. The AMR board is supposed to meet this week, I believe Tuesday and Wednesday. If we’re talking about an announcement on or before mid-February, this is the time for the AMR board to make its decision or give guidance on the final unsettled items.

Q. What’s driving the mid-February deadline?

A. As we understand it, the non-disclosure agreement signed by the Ad Hoc Committee of AMR Corporation Creditors expires in mid-February. Feb. 15? In any case, they presumably would be free to buy and sell AMR stock or debt instruments after the NDA expires. The other NDAs are expiring this Thursday, Jan. 31, we’ve heard. If the past holds true, those NDAs presumably would be extended to match the Ad Hoc Committee’s NDA timetable.

ADDENDUM: As a US Airways pilot pointed out, the parties are also waiting for the outcome of a vote by US Airline Pilots Association members on a memorandum of understanding. Voting wraps up Feb. 8.

Q. What’s left to decide?

A. We can only speculate. But we’ve heard that the issue of top management is still being debated. The US Airways side wants the merged airline to be run by Doug Parker and his team. But Tom Horton and his team want to stay. Sometimes, those disputes are settled by giving one side the chairmanship and the other the CEO job. But that probably is less likely in this case because this didn’t start out as a friendly merger.

Also, we don’t know if the issue of relative shares has been settled. The latest information has been that AMR interests will own 70 percent of the merged company and US Airways interests will own 30 percent. That could change (and may have already changed). And what if there’s additional investment in the merged airline?

Q. On the leadership issue, what has happened at other airlines that merged?

A. We’d say that on the Delta-Northwest merger, it’s a tie: the chairman, Daniel Carp, is a non-executive chairman. The CEO, Richard Anderson, was Delta CEO at the time of the merger but was a former Northwest CEO. President Ed Bastian was a Delta executive before the merger.

When United and Continental merged, United chairman and CEO Glenn Tilton moved to chairman, and many of the other top jobs, including CEO Jeff Smisek, were Continental alumni. Tilton retired at the end of 2012.

Parker and his team were leading America West Airlines at the time of its 2005 merger with US Airways. In the following year’s proxy, seven of the eight top executive officers listed were America West alumni, to one holdover (a senior vice president) from US Airways.

Q. So, is there going to be a merger?

A. We’d say it’s more likely than not.

Posts: 1634 | From: Hampton, NH  |  IP: Logged
Bob Ritchie
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Member # 1035

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As for United and USAirways....

....they are just names on the side of the Airplanes.

Kind of like the last of the Packard automobile line. They were in fact Studebakers....with the Packard name stuck on the grille.

Will American Airlines suffer the same fate? I hope not. That $4,000,000,000.00 in the bank is American's money. It is the American employee sacrifices and management decisions that have made AA the strongest, healthiest, U.S. airline ever to have entered bankruptcy. USAirways contributed nothing to AA's stature. USAirways is an ugly pregnant gal trying to convice AA that their marriage would be made in heaven.

I'd love to see AA emerge from bankruptcy as a stand alone carrier. Options thereafter would be on their own terms. But of course it all about the "art of the deal" anymore. So who knows what will transpire.


[ 01-29-2013, 11:35: Message edited by: Bob Ritchie ]

Posts: 1936 | From: Warren County, Missouri  |  IP: Logged
Post Captain
Member # 251

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"...AA the strongest, healthiest, U.S. airline ever to have entered bankruptcy." Sounds somewhat like an oxymoron to me! [Big Grin] Healthy airlines don't enter into bankruptcy although that seems to be how airlines of late have dealt with their unions...AA and US need this merger to compete with UAL and Delta (IMHO).
Posts: 206 | From: San Diego/ San Felipe,Mexico  |  IP: Logged

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